New York City has one of the world’s iconic skylines, and that skyline has a quirk. There’s a gap with no skyscrapers here. Instead of one business district, Manhattan has two. For a long time, the conventional wisdom was that it had to do with the island’s geology, but economists have made a compelling case that it’s not about rocks, but money. In 1968, a geologist noted the correlation between building height and the depth of the bedrock. Where the bedrock was really far below the surface, there weren’t any skyscrapers. Once that correlation was pointed out, it became one of the more popular bits of trivia about the city skyline. This made an intuitive sort of sense. Skyscrapers are so heavy that they need to be anchored to the solid bedrock. Otherwise, they could sink or settle like the Leaning Tower of Pisa. No one ever empirically tested the bedrock value idea until 2011. As it turns out, some of the tallest buildings were built over some deep bedrock like the Woolworth Building and the Manhattan Life Insurance Building. When you look at the skyline like an economist, you see that skyscrapers are where they are because of the flow of people and money. Developers put their skyscrapers where demand was greatest, so they could not only recoup their costs but also make a tidy profit on rental income. It’s good for the bottom line when you’re close to other businesses in your industry. You’re close to suppliers and clients. Information flows more freely. Business is conducted more efficiently. Economists call these agglomeration benefits. So, if you’re a white-collar firm, you’re going to pay a premium for space in lower Manhattan. If you’re a developer, the best way to maximize your profit on the hugely expensive land you’ve just purchased is to build up. Skyscrapers accommodate lots of tenants who are willing to pay top dollar to be near other firms. By the 1860’s, downtown was full of financial firms. But why do these firms just keep expanding north from the financial district? It’s because north of City Hall was the tenement district. So, middle and upper-class residents started moving even further north. By the 1870’s, retailers had moved in to cater to these affluent consumers, and you had a full-fledged shopping district from Union Square to Madison Square. This shopping district set off a chain reaction. Architects, real estate developers, newspaper publishers benefited from being closer to where their employers and potential customers were living. As Penn Station and the Grand Central Terminal were completed in 1910 and 1913, proximity to those transit hubs made the neighborhood even more attractive. These days, that hole in the skyline is starting to fill in. Thanks to rising land values, we’re seeing skyscrapers sprout in what used to be the tenement district like One Manhattan Square on the lower east side and 56th Leonard in Tribeca definitively putting the bedrock myth to bed. Thanks for watching. Hit the comments to talk all things skyscrapers, skylines, and urban planning. Like, subscribe, and we’ll see you next time.